Baptist Health Medical Center North Little Rock has agreed to pay $2.7 million to settle a federal finding that it had submitted improper claims to Medicare for short stays at the 248-bed hospital in 2008 and 2009.

U.S. Attorney Chris Thyer announced the agreement on behalf of the Office of Inspector General of the Department of Health and Human Services.

The government said the agreement covered payments the hospital sought from Medicare between Jan. 1, 2008 and Dec. 31, 2009. A government news release said these covered "short stay" inpatient "encounters" of less than two nights. It said the hospital submitted claims as a result of "a) improper orders for inpatient status converted from outpatient status; b) improper inpatient standing orders for admission without proper involvement of a physician, and c) improper orders for inpatient status following scheduled outpatient procedures."

Thyer's release said that, in return for release of exclusion liability under the Social Security Act, the hospital agreed to enter a five-year integrity agreement that requires it and a sister hospital in Little Rock to be subject to independent annual claims reviews.

The inspector general's audit had been referred to the Justice Department.

I have put in a call to Baptist Health, which operates the hospitals and others, for comment.

UPDATE FROM BAPTIST HEALTH:

Following a 2011 routine Medicare billing audit of seven Medicare claims areas for the years 2008 and 2009 at our medical center in North Little Rock, the Office of the Inspector General for HHS identified possible errors in only one of the seven areas identified.

These disputed claims amount to approximately 550 claims or less than seven tenths of 1% of the total claims submitted to the federal government by the North Little Rock facility during that time period. Specifically, these were claims centered around the federal government’s reimbursement regulations for the decision about whether to admit an individual for hospital inpatient care or to provide observation services .

In settling this matter, Baptist Health is not admitting any liability and the federal government has not alleged any issues with patient care or patient safety or quality of care. To avoid the inconvenience and expense of a protracted dispute with the federal government, we have agreed to settle by paying overpayments received in 2008 and 2009. We have also agreed to work with the federal government to monitor our admissions policies and build on our existing and comprehensive compliance program of robust training, reporting and review protocols.

As of October of 2014, the office of Inspector General has suspended reviews of the same type of short stay claims. National health care groups have advocated changes in policy surrounding reimbursement relating to short hospital inpatient admissions. They claim the shifting and often ambiguous standards make it extremely difficult for physicians and hospitals to consistently comply with the regulations.

In fact, the American Hospital Association has filed lawsuits, which we support, challenging the U.S. Department of Health and Human Services regulatory rules surrounding inpatient admissions. The AHA has contended the regulations impose burdens that could compromise care for seniors and represent unlawful arbitrary standards and documentation requirements while depriving hospitals of proper Medicare reimbursement for caring for patients.

"In resolving this audit settlement Baptist Health will continue to demonstrate daily the highest ethical standards, as we strive to operate in a complex and changing regulatory environment." said Mark Lowman, Spokesman for Baptist Health.